Digital fraud is on the rise at steep rates.
According to the “2023 State of the Omnichannel Fraud Report” from consumer credit reporting agency TransUnion, 4.6% of all customers’ digital transactions globally were suspected to be fraudulent. This percentage is in line with rates found in 2019.
However, because the number of transactions conducted digitally has substantially risen in the last few years, the total volume of suspected digital fraud attempts has increased dramatically.
Globally, TransUnion data indicates digital fraud attempts have increased by 80% from 2019 to 2022, while rising 122% for digital transactions originating in the U.S. during that time.
The gaming and retail industries saw the highest rate of suspected digital fraud at 7.5% and 7.2%, respectively. The number of overall data breaches in the U.S. increased by 83% from 2020 to 2022.
In addition to the overall increase in volume, the severity of data breaches also rose, reflected in an increase of 6% in Sontiq’s Breach Risk Score over that time period.
Credit Card Fraud is Most Common, but ACH/Debit and Synthetic Identity Fraud are Rising
Percent of digital fraud in 2022
Volume change 2019–2022
True identity theft
Source: TransUnion TruValidate
In addition, a TransUnion-commissioned consumer survey across 18 countries and regions showed that 52% of respondents indicated that they were targeted by fraud via email, online, phone call, or text messaging in the three months beginning September 2022. Close to half (49%) U.S. respondents said they had been targeted by fraud attempts via those communications channels over the same time period.
According to TransUnion, data breaches have played a key role in helping to fuel a sharp rise in identity engineering, with synthetic identities becoming a record-setting problem in 2022. Outstanding balances attributed to synthetic identities for auto, credit card, retail credit card and personal loans in the U.S. were at their highest point ever recorded by TransUnion—reaching $1.3 billion in the fourth quarter of 2022 and $4.6 billion for all of 2022.
“The explosion of digital transactions, the accelerated adoption of digital technologies, and increasing appetite for faster access to funds/credit, have led to an increase in fraud losses, particularly in digital channels,” said Naureen Ali, VP of product management at Transunion. “Consumers are expecting organizations to protect their identities and online accounts, and those companies that do not adequately honor those preferences may lose business as a result.”
[Read more: Study: Total e-commerce fraud in 2023 will exceed $200 billion]